Exploring The Competitive Space: Tesla Versus Industry Peers In Automobiles
In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Tesla (NASDAQ:TSLA) in comparison to its major competitors within the Automobiles industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.
Tesla Background
Tesla is a vertically integrated battery electric vehicle automaker and developer of real world artificial intelligence software, which includes autonomous driving and humanoid robots. The company has multiple vehicles in its fleet, which include luxury and midsize sedans, crossover SUVs, a light truck, and a semi truck. Tesla also plans to begin selling a sports car and offer a robotaxi service. Global deliveries in 2024 were a little below 1.8 million vehicles. The company sells batteries for stationary storage for residential and commercial properties including utilities and solar panels and solar roofs for energy generation. Tesla also owns a fast-charging network and an auto insurance business.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 327.72 | 19.76 | 17.51 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 9.57 | 1.18 | 0.89 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.85 | 1.17 | 0.44 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 35.74 | 15.06 | 8.09 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.38 | 1.12 | 0.28 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 16.09 | 1.71 | 0.91 | -0.86% | $-0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 20.11 | 1.31 | 0.58 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 32.70 | 0.96 | 0.41 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.07 | 1.53 | 0.36 | -28.77% | $-0.01 | $-0.01 | -4.97% |
| Average | 17.69 | 3.01 | 1.49 | -1.06% | $229.23 | $247.75 | 0.91% |
By conducting a comprehensive analysis of Tesla, the following trends become evident:
The current Price to Earnings ratio of 327.72 is 18.53x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 19.76 which exceeds the industry average by 6.56x.
The stock's relatively high Price to Sales ratio of 17.51, surpassing the industry average by 11.75x, may indicate an aspect of overvaluation in terms of sales performance.
The company has a higher Return on Equity (ROE) of 1.75%, which is 2.81% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.66 Billion, which is 0.02x below the industry average, the company may face lower profitability or financial challenges.
The company has lower gross profit of $5.05 Billion, which indicates 0.02x below the industry average. This potentially indicates lower revenue after accounting for production costs.
The company is experiencing remarkable revenue growth, with a rate of 11.57%, outperforming the industry average of 0.91%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In terms of the Debt-to-Equity ratio, Tesla can be assessed by comparing it to its top 4 peers, resulting in the following observations:
Tesla exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.17.
This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
Key Takeaways
The high PE, PB, and PS ratios suggest that Tesla is relatively overvalued compared to its peers in the Automobiles industry. On the other hand, the high ROE and revenue growth indicate strong profitability and potential for future growth. However, the low EBITDA and gross profit levels may raise concerns about the company's operational efficiency and financial health. Overall, Tesla's valuation appears to be driven more by growth expectations rather than current financial performance when compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.